The Best Energy Stocks to Buy According to Industry Insiders

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It is no secret to investors that energy stocks lagged the market in 2012 - but now in 2013 some are becoming the best stocks to buy as they head for huge gains.

The Energy Select Sector SPDR ETF (NYSE: XLE) has gained about 6.5% over the past year, below the 8% gain in the Dow Jones Industrial Average and the 11.5% rise in the Standard & Poor's 500 Index.

But just looking at 2013, you'll see XLE has risen 8.7%, compared to the Dow's 6% gains and the S&P's 5.13%.

And money is pouring into this sector from a key group of investors: corporate insiders.

As far back as 1968 legendary speculator Victor Niederhoffer and his mentor Professor James Lorie discovered that cluster buying of stock by corporate insiders offered substantial excess returns over the market. When three or more officers and directors of a company break out their checkbooks to buy their own stock there is a good chance that the stock price is headed higher.

This anomaly had been confirmed many times by academics and investors over the year and still holds true today.

The other metric with tracking when it comes to corporate insiders is buying by those two executive officers who are in the best position to evaluate the company's conditions and prospects - the chief executive officer and chief financial officer. If they are buying more shares in the open market chances are high they think the shares are cheap and good things are about to happen.

Best Stocks to Buy Now: What Energy Insiders Like

We are starting to see a substantial amount of insider activity in a few oil production and energy services names, like the following:

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